A Practical Guide to EHS Compliance Risk Management

Importance and Benefits

Industrial accidents were once considered unavoidable until trade unions began advocating for worker and environmental protection in the early 1900s. It took decades for environmental preservation, public health, and workplace safety to be at the forefront and integrated into a unified concept. However, with the collaboration between governments and civic society organizations, compliance with EHS management systems has become a standard that companies across industries should adhere to.

These are some benefits businesses gain when they manage compliance risks satisfactorily:

• Reduced workplace incidents and subsequent costs – Following a strategic approach helps identify and mitigate potential risks and existing hazards, leading to fewer workplace incidents, which are usually expensive due to hospitalization costs, compensation claims, and regulatory fines.
• Improved operational efficiency and productivity – Ensuring a safer working environment enhances morale. Workers who feel safe perform their tasks with confidence. Their all-out effort contributes to the company’s bottom line and enduring success.
• Enhanced regulatory compliance and brand value enhancement – The lack of a well-developed compliance management strategy may result in significant fines, serious penalties, and a damaged reputation. Demonstrating a commitment to EHS helps companies avoid legal issues and increase customer loyalty and investor confidence.

Common EHS Compliance Risks

Managing EHS compliance risks isn’t an easy feat, especially for large enterprises operating across different regions. As the world evolves, new environmental, health, and safety issues emerge, requiring immediate action. Get to know some of the most prevalent:

• Hazardous chemicals, when improperly handled, stored, and disposed of, can lead to severe environmental and health consequences. The 1984 Bhopal disaster led to the Clean Air Act, which held corporations accountable for similar issues.
• Harmful emissions from industrial activities and transportation are a major health concern that’s said to cause millions of premature deaths every year. The EU’s Fit for 55 package aims to reduce greenhouse gases in Europe by 2030.
• Falls, slips, and trips cause over 37 million injuries and nearly 700,000 fatalities globally. The Health and Safety at Work Act 1974 mandates companies to implement controls to ensure people don’t suffer from this problem in the UK.
• Musculoskeletal disorders (MSDs) are often ignored because their effects aren’t immediately felt. Canada’s OSHA established a law requiring employers to take all precautions to protect workers from contact stress through better ergonomics.
• Hazardous waste has potentially long-term consequences. Australia’s Hazardous Waste (Regulation of Exports and Imports) Act of 1989 aims to protect people and the environment by controlling waste movement.

EHS Compliance Risk Management Components

A strong compliance risk management framework centered on the environment, health, and safety involves several interconnected elements. Compliance officers, risk management professionals, and corporate legal teams should understand these essentials and key aspects to achieve their goals:

EHS Compliance Risk Management Components

EHS Policy, Governance, and Regulatory Adherence

Establishing a clear EHS policy and governance framework ensures that organizations are committed to safety and environmental responsibility. These outline roles, responsibilities, and expectations for compliance with regulations.

• Review regulatory frameworks (e.g., the World Bank Group EHS Guidelines, ISO 14001 for environmental management, and ISO 45001 for occupational health and safety management) applicable to your operations.
• Create policies and procedures that align with business goals and regulatory requirements.
• Conduct periodic internal and external reviews to ensure adherence.

Hazard Identification and Risk Assessment

Identifying potential hazards and assessing risks are foundational in preventing accidents and environmental damage. These involve systematically evaluating workplace conditions to pinpoint areas of risk.

• Job hazard or safety analysis identifies, evaluates, and controls specific tasks.
• Process hazard analysis identifies, evaluates, and controls hazards associated with industrial processes.
• Exposure monitoring measures levels of hazardous substances.
• Risk matrices score the severity and likelihood of risks for better prioritization.

Risk Mitigation and Engineering Controls

Once risks are identified, mitigation strategies and engineering controls should be implemented to reduce or eliminate hazards. These may include building physical barriers, updating safety protocols, and developing new training programs.

• Hierarchy of controls (i.e., elimination substitution, engineering controls, administrative controls, and personal protective equipment)
• Emergency preparedness measures
• Preventive actions to address root causes and prevent recurrence.

Safety Culture and Employee Involvement

A strong culture of safety ensures that compliance isn’t just an obligation to regulatory agencies but an integral part of the organization’s values and daily operations. Involving employees in safety initiatives leads to better hazard identification and risk reduction.

• Hazard and near-miss reporting systems create an open and anonymous platform for employees to report unsafe conditions.
• EHS leadership training equips managers and supervisors with the skills to become more proactive.
• Incentive and recognition programs reward employees for their efforts, especially with adherence to policies and external regulations.

EHS Performance Monitoring and Continuous Improvement

Regularly monitoring EHS performance allows organizations to track progress, identify areas for improvement, and adjust strategies as needed. Building a culture of continuous improvement is key to maintaining high safety standards and adapting to evolving regulations.

• Leading and lagging indicators track proactive (e.g., near-miss reports, training) and reactive (injuries, incidents) safety metrics.
• Regular workplace monitoring tracks specific organizational concerns, such as air quality, noise, and chemical exposure.
• Behavior-based safety programs identify unsafe behaviors and reinforce best practices.

Compliance Documentation, Reporting, and Recordkeeping

Accurate and comprehensive documentation is critical for demonstrating compliance with regulations. This involves maintaining detailed records of incidents, audits, and compliance initiatives.

• Incident and injury logs document workplace accidents and corrective actions.
• Audit trails maintain comprehensive records of inspections, risk assessments, and training.
• Regulatory reporting ensures that complete documents are submitted to applicable agencies on time.

Overcoming Challenges

Managing EHS compliance risks isn’t a walk in the park due to several factors. Despite strictly following the framework, there are still some obstacles that are difficult to ignore and overcome, including the following:

• Complex and evolving regulatory landscape – Laws constantly change at local, national, and international levels. Many companies—especially those operating across different jurisdictions—struggle to stay informed and adapt quickly.
• Resource limitations – Managing compliance risks requires significant labor, expertise, time, and funds. Lack of resources can be a significant burden to many, increasing the risk of non-compliance.
• Communication and visibility breakdowns – Collaboration can be daunting in international operations, with numerous departments, frontline workers, and external suppliers.

Leveraging modern technology, such as comprehensive EHS platforms and granular EHS compliance risk management software, can streamline relevant processes, help companies maintain regulatory compliance, and overcome the inherent challenges enterprises face daily.